Debt and Pay Day loans  


 

Lesley Brennan and Richard McCready

26 November 2013

Councillors Lesley Brennan and Richard McCready have commented on the findings of research by the debt charity Step Change on the payday loan debt factor  amongst those on low incomes where, the charity say, "debt can become a problem at just £10."

StepChange says : " Debt is pervasive in modern Britain.

" Around £158 billion is consumer debt.

"About a third of this, £53 billion, is credit card debt."

StepChange  say that they have £3.8 billion in unsecured debts under its management.

They have assisted over 129,000 people repay £327 million in 2012, £13.3 million of which came from came from Scotland.

The findings are contained in a report entitled "Scotland in the Red" (Link )

For Dundee (the two Scottish Parliament constituencies of Dundee City East and Dundee City West), the charity has published data on the average amount and source of debt of a sample of clients . (see below) 

In Dundee City East, the average pay day loan debt was £817.

In Dundee City West the average pay day loan debt was £1,218.

Councillor Lesley Brennan said,

“These figures tragically reveal the despair that traps families who need to take out high-cost loans to pay for essentials such as food and heating .

“These people who are caught in the cost of living crisis need support to manage their debts.

“The case for taking action to cap the cost of borrowing has proven to be indisputable, with action now promised.

“We need to go further and support credit unions who can provide loans that cost much less than those from legal loan sharks."

West End Councillor Richard McCready said,

 

“I think that this report is a stark reminder of the cost of living crisis which faces many people in Dundee in the run-up to Christmas. 

 

“I welcome the fact that the Scottish Government has listened to my colleague Kezia Dugdale MSP and that the UK Government is listening to my colleague Stella Creasy MP and taking some action against Pay Day lenders. 

 

“I believe that pay day lenders should have to produce a wealth warning which states the cost of the loan. 

 

“The wealth warning would be similar to the health warnings on alcohol and cigarettes and is designed to make sure that people understand what they are doing when they sign up to a pay day loan. 

 

“I want effective action against Pay Day lenders who trade on the misery of others and I will be keeping a close eye on the changes being made by the Scottish and UK Governments.'

 

"The council can and should do more to combat debt in the city. 

 

“We need to do all that we can to promote Discovery Credit Union for example. 

 

“The council should also look at doing more to promote the Living Wage in the city and also bring more jobs to the city. 

 

“We need to see jobs delivered rather than talks about jobs.'

 

'The UK Government, the Scottish Government and the City Council need to work together to tackle the problems of debt and deal with the cost of living crisis. 

 

“ We need coordinated action to tackle these problems.”

 

Ed Miliband has said that Labour intends to levy a tax the profits of payday lenders to increase the funding available to low cost alternatives such as credit unions to help families deal with soaring personal debt.

Figures for Dundee City East and Dundee City West

The figures are relatively small ( 73 in Dundee City East ; 61 in Dundee City West ) , but they're still useable to illustrate the types and levels of debt

Dundee City East

(Number of clients – 73)

Average income (monthly)

£1,222

Average debt overall

£12,366

Average Rent arrears

£540

Average mortgage arrears

£1,352

Average electricity arrears

£155

Gas arrears

£552

Council tax arrears

£1,421

Average Pay Day Loan debt

£817

Dundee City West

(Number of clients – 61)

Average income (monthly)

£964

Average debt overall

£10,852

Average Rent arrears

£432

Average mortgage arrears

£1,012

Average electricity arrears

£275

Gas arrears

£324

Council tax arrears

£624

Average Pay Day Loan debt

£1,218

 

 

 

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